Asset purchase programmes

Expanded asset purchase programme

The expanded asset purchase programme (APP) adds the purchase programme for public sector securities to the existing private sector asset purchase programmes to address the risks of a too prolonged period of low inflation. It consists of

  • third covered bond purchase programme (CBPP3)
  • asset-backed securities purchase programme (ABSPP)
  • public sector purchase programme (PSPP)

Monthly purchases in public and private sector securities will amount to €80 billion (from March 2015 until March 2016 this figure was €60 billion).

They are intended to be carried out until the end of March 2017 and in any case until the Governing Council sees a sustained adjustment in the path of inflation that is consistent with its aim of achieving inflation rates below, but close to, 2% over the medium term.

Will the APP purchases amount to exactly €80 billion every month?

The monthly €80 billion target refers to the average purchase volume as of April 2016. The Eurosystem will continue to allow the actual monthly purchase volumes under the APP to reflect seasonal fluctuations in market liquidity, as was the case in 2015.

This means that the Eurosystem engages in moderate front- and back-loading of aggregate purchases in months with adequate market liquidity and allows the purchases to fall below the monthly average in periods of relatively low market activity, notably the summer and the immediate run-up to year-end. The front- and back-loading is not tied to a specific calendar but to the Eurosystem’s judgement of market conditions. Additionally, the monthly purchase volumes of the different programmes under the APP (ABSPP, CBPP3, CSPP and PSPP) will remain flexible to take into account prevailing market liquidity and activity at any time.
See the Q&A for more details on the PSPP.

Overview

Purchases of marketable debt instruments increase the Eurosystem holdings and inject liquidity into the banking system in order to meet the Governing Council's monthly purchase target of €80 billion (from March 2015 until March 2016 this figure was €60 billion).

Eurosystem holdings under the expanded asset purchase programme
  ABSPP CBPP3 PSPP APP
Holdings* March 2016 18,994 165,638 648,022 832,654
Monthly net purchases 50 6,615 78,499 85,164
Quarter-end amortisation adjustment 0 0 0 0
Holdings* April 2016 19,043 172,253 726,521 917,817
*At amortized cost, in euro million, at month end.
Figures may not add up due to rounding.
Figures are preliminary and may be subject to revision.

The table presents the Eurosystem holdings at the end of the month and a breakdown in the change of Eurosystem holdings into monthly net purchases.

Amortisation adjustments are made at the end of each quarter. The amortisation emerges from an accounting principle that implies that securities purchased at prices below face value have to be revalued upwards over time towards maturity, and revalued downwards over time, if purchased at prices above face value.

 

History of cumulative purchase breakdowns under the APP.
Weekly changes are reported in the Eurosystem weekly financial statement, full historical data are available in the Statistics section under Data on daily liquidity conditions.

Active asset purchase programmes

Public sector purchase programme

On 9 March 2015 the Eurosystem started to buy  public sector securities under the public sector purchase programme (PSPP).

The securities covered by the PSPP include:

  • nominal and inflation-linked central government bonds
  • bonds issued by recognised agencies, international organisations and multilateral development banks located in the euro area

The Eurosystem intends to allocate 90% of the total purchases to government bonds and recognised agencies, and 10% to securities issued by international organisations and multilateral development banks (from March 2015 until March 2016 these figures were 88% and 12% respectively).

Implementation aspects of the PSPP
More details on the public sector purchase programme (PSPP) - Questions & answers

Securities purchased under the PSPP are made available for securities lending to support market liquidity and collateral availability in the market.

Lending of holdings purchased under the PSPP
Holdings of the ECB made available for lending in the context of the PSPP and the SMP

PSPP holdings*
€ mil. 780,133
Date 20 May. 2016
* end of week, at amortised cost
 

Holdings by end of month:

Breakdown of debt securities under the PSPP
as at
30 April 2016
Monthly net purchases* Cumulative monthly net purchases* Weighted average remaining maturity in years
Austria 2,060 18,761 8.71
Belgium 2,612 23,634 9.79
Cyprus** 0 269 5.44
Germany 18,985 171,808 7.18
Estonia 5 66 2.20
Spain 9,318 84,478 9.61
Finland 1,324 12,025 7.60
France 14,933 136,510 7.68
Ireland 1,078 11,054 9.47
Italy 12,998 117,795 9.36
Lithuania 104 1,554 6.61
Luxembourg 35 1,573 6.51
Latvia 76 875 5.37
Malta 60 483 10.15
The Netherlands 4,224 38,229 7.15
Portugal 1,405 16,249 10.17
Slovenia 236 3,233 8.09
Slovakia 329 6,513 8.24
Supranationals 8,717 87,692 6.79
Total 78,499 732,802 8.08
* Book value in euro million.
** Negative net March 2016 purchases in Cyprus are the result of transactions conducted to ensure continued compliance within the limit framework reflecting buyback operations by the Cypriot Public Debt Management Office.
Note: Figures may not add up due to rounding.
When assessing the weighted average remaining maturity of Eurosystem holdings relative to a market measure, deviations could reflect inter alia the 2 to 30 year maturity range of purchases, the issue share limits taking into account holdings in other Eurosystem portfolios as well as the availability and liquidity conditions in the market during the implementation period.

History of cumulative purchase breakdowns under the PSPP

Asset-backed securities purchase programme

ABSPP holdings*
€ mil. 19,093
Date 20 May. 2016
* end of week, at amortised cost

The asset-backed securities purchase programme (ABSPP) started on 21 November 2014 and will last for at least two years.

The ABSPP helps banks to diversify funding sources and stimulates the issuance of new securities. Asset-backed securities can help banks to fulfil their main role: providing credit to the real economy. For instance, securitising loans and selling them can provide banks with the necessary funds to provide new lending to the real economy. This will further ease funding and credit conditions and help the transmission of monetary policy.

Decision ECB/2014/45, 19 November 2014
Decision ECB/2015/31, 10 September 2015
Guiding principles (with examples) of Eurosystem-preferred eligible ABSs
FAQs on the Eurosystem’s asset-backed securities purchase programme (ABSPP)

Breakdown of ABSPP holdings*
Market Primary Secondary
€ mil. * 5,606 13,437
Share * 29.44% 70.56%
Date 30 April 2016
* end of month, at amortised cost

History of cumulative purchases breakdowns under the ABSPP

Covered bond purchase programme 3

CBPP3 holdings*
€ mil. 176,206
Date 20 May. 2016
* end of week, at amortised cost

On 20 October 2014 the Eurosystem started to buy covered bonds under a third covered bond purchase programme (CBPP3). The programme will last for at least two years and, together with the ABSPP and the series of targeted longer-term refinancing operations to be conducted until June 2016, will have a sizeable impact on the ECB's balance sheet.

These measures help to enhance the functioning of the monetary policy transmission mechanism, support financing conditions in the euro area, facilitate credit provision to the real economy and generate positive spillovers to other markets.

Decision ECB/2014/40, 15 October 2014

Breakdown of CBPP3 holdings*
Market Primary Secondary
€ mil. * 50,710 121,543
Share * 29.44% 70.56%
Date 30 April 2016
* end of month, at amortised cost

History of cumulative purchases breakdowns under the CBPP3
FAQs on the Eurosystem's third covered bond purchase programme (CBPP3)

Terminated programmes

Securities Markets Programme

On 10 May 2010, the central banks of the Eurosystem started purchasing securities in the context of the Securities Markets Programme (SMP), with a view to addressing the severe tensions in certain market segments which had been hampering the monetary policy transmission mechanism. Following a Governing Council decision on 6 September 2012 to initiate outright monetary transactions, the SMP was terminated. The existing securities in the SMP portfolio will be held to maturity. For details see the press release: Technical features of Outright Monetary Transactions; as well as ECB decision of 14 May 2010 ECB/2010/5 and the press release of 10 May 2010: ECB decides on measures to address severe tensions in financial markets.

With a view to leaving liquidity conditions unaffected by the programme, the Eurosystem re-absorbed the liquidity provided through the SMP by means of weekly liquidity-absorbing operations until June 2014. On 5 June 2014, the ECB suspended the weekly fine-tuning operations sterilising the liquidity injected by the programme and the last operation was allotted on 10 June 2014.

SMP holdings*
€ mil. 110,973
Date 20 May. 2016
* at amortised cost
Covered bond purchase programme
CBPP holdings*
€ mil. 18,980
Date 20 May. 2016
* at amortised cost

On 2 July 2009, the Eurosystem launched its first covered bond purchase programme (CBPP1). The programme ended, as planned, on 30 June 2010 when it reached a nominal amount of €60 billion. The Eurosystem intends to hold the assets bought under this programme until maturity.

For details, see ECB decision of 2 July 2009 (ECB/2009/16) as well as the press releases Purchase programme for covered bonds (4 June 2009) and Covered bond purchase programme completed (30 June 2010).

Covered bond purchase programme 2
CBPP2 holdings*
€ mil. 8,422
Date 20 May. 2016
* at amortised cost

In November 2011, the Eurosystem launched a second covered bond purchase programme (CBPP2). The programme ended, as planned, on 31 October 2012 when it reached a nominal amount of €16.4 billion. The Eurosystem intends to hold the assets bought under this programme until maturity.

Breakdown of CBPP2 holdings*
Market Primary Secondary
€ mil. * 6,015 10,375
Share * 36.70% 63.30%
Date 31 October 2012
* at amortised cost

For details, see ECB decision of 3 November 2011 (ECB/2011/17) and the press release ECB announces details of its new covered bond purchase programme (CBPP2) (3 November 2011).

History of cumulative purchases breakdowns under the CBPP2